Securities Board of Nepal (Sebon) has reduced the settlement and clearance system time to T+2 from current T+3 to encourage more trading hoping that the exchange will be more dynamic with a faster settlement system.
The move – that was mentioned by the regulator on it’s to-do list of for the fiscal year 2077-78 – is expected to please the stock traders as they will now get paid within the two days of the trading. The regulatory body approved the T+2 due to increasing use of technology in the stock market and international practice, according to the Sebon.
The CDS and Clearing (CDSC) Ltd had submitted a proposal to the regulator to change the current settlement T+3 system to T+2, a press note from the Sebon reads, adding that it has approved the proposal.
T+3 means that it takes 3 days for the settlement of securities traded as the buyers receive the shares that they buy in about three days. But with the Sebon’s approval of T+2 system, the settlement process for the shares traded will hopefully take lesser time, the press note adds.
It is a frequent complaint from investors that they do not get the shares – in case of buying – and payment – in case of selling – on time. Even under the current system – the T+3 system – the clients have not been able to receive their payment within three days neither have they been able to get paid within a week. However, the authorities have claimed to improve and speed up the settlement system convincing the investors, who still do not believe.
The CDSC said that the T+2 system will be implemented after it issues a public notice addressing all the grievances.
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